Did Canada’s jobs report make a 50bps rate cut a certainty this Wednesday?

TD’s Andrew Foran felt that 25bps was the likely outcome following the GDP data and his colleague Maria Solovieva says that this still may be the route the BoC takes if it prioritizes the risk from tariffs, fiscal spending, consumer spending, and real estate. But the jobs report and broader economic weakness could take centre stage and prompt a 50bps cut.

Last week, former BoC governor Stephen Poloz said that the economy is already in recession, and not even a technical one.

Michael Davenport, economist at Oxford Economics Canada, told CTV News that: “With slack continuing to build in the labour market, GDP growing at a soft below-potential pace, and inflation at the 2% target we expect the Bank of Canada will push ahead with another 50bp rate cut next week,”

Not a reason to cut

Meanwhile, Derek Holt at Scotiabank remains critical of BoC policy and, while he expects the decision makers to make a 50bps cut on Wednesday, he does not think the jobs report is a reason to do so with 50,000 jobs added “nothing to spit at.”

Holt says that the two reasons why the BoC may cut by 50bps are, firstly, risk management in line with concerns about not cutting enough to prevent inflation falling too far; and secondly, because the markets expect it.